Recently I’ve been investigating how much to charge for my upcoming iPhone application, and trying to determine how much money it will make in a year. Ideally, I’d like to make a living off just building apps instead of contracting. Unfortunately the App Store is still young, and there’s very little data out there. I’ve scrapped together what little data I could find, and included it with my commentary in this article.

As far as pricing goes, the general consensus seems to be that iPhone applications can range from Free to $10. I got this mainly from just looking around on the App Store and checking out the prices. That said, Medialets has some interesting data about App Store pricing. The sweet spot seems to be $5, especially for games, with only big name companies being able to command a full $10. Since Apple takes 30% off the top, my app could potentially make anywhere between $0.70 and $7.00 per unit, but on average I should expect $3.50/unit.

Now that I have an estimated price that I could charge for my app, I need to know how many units of said app I could reasonably expect to sell in a year. Unfortunately, this is where the data gets really scarce.

I found (or have been sent) ten articles where people reveal actual sales numbers. Unfortunately, there is little context for the numbers, and sometimes they are for one day only. This makes it impossible to draw decent conclusions from the data, as I don’t know if the numbers are anomalous or not, or what part of the cycle they come from (right after release or after the app has been sitting out in the hot sun all day). The ten articles are:

The articles contain data for twelve different applications of varying popularity with varying levels of advertising. I’ve also been sent data privately for eight other applications. I’ve summarized the data in the table below:

Amount Sold Time Period Price Average Sold per Day
428 1 day $5.99 428
10486 82 days $1.99/$3.99 128
24094 31 day $2.99 777
3168 31 day $0.99 102
60 1 day $0.99 60
162 10 days $2.99/$3.99/$4.99/$7.99 16
676 6 days $0.99 113
1863 14 days $0.99 133
5088 62 days $1.99 82
605 62 days $0.99 10
95 60 days $5.99 2
10 1 day $7.99 10
4037 46 days $4.99 88
191 21 days $3.99 9
75 14 days $3.99 5
451 66 days $0.99 7
59 45 days $1.99 1
2280 49 days $1.99/$0.99 49
275 9 days $0.99 31
2250 10 days $1.99 225

Some statistics of “average sold per day” from this data: Min: 1, Max: 777, Median: 49, Mean: 114.

As I said earlier, it’s hard to know if these numbers are at all representative of what’s actually happening with most applications. Still, these are the only numbers I could find, so I’ll try to do something with them.

Looking at this data, there’s clearly a worst case scenario: only selling 1/day while only making $0.70/unit. That would mean I’d only make $255.50/year. Don’t sell the bike shop yet, Wilbur. The best case would be selling 777/day while having a $9.99 price point, which would earn me $1,985,235.00/year or just under $2 million a year. That’s not very realistic though.

If I assume an average price point, $4.99, with what the data says is the mean of sales per day, 114, then that means I would make $145,635.00/year. That said, 114 sounds high to me for a real average. The 777 figure in the calculation seems to push the mean higher than I should realistically expect. So if I assume the median, 49, at the average price point, $4.99, then I would make $62,597.50/year. Or the minimum of 1/day at $4.99, then it would be $1277.50/year.

I’ve summarized the possible units per day discussion in the following table:

Scenario Average Sold per Day Price Yearly Income
Minimum 1 $0.99 $255.50
Maximum 777 $9.99 $1,985,235.00
Mean 114 $4.99 $145,635.00
Median 49 $4.99 $62,597.50
Minimum sales, Mean price 1 $4.99 $1,277.50

Disclaimer: I’m using “mean,” “median,” etc in the mathematical sense, based on the whopping data set of twenty presented above. I’m not suggesting that these are the numbers you will actually see.

I have to admit, the number of units sold per day sounds high to me, even with the 60 a day figure, although 16 per day might be reasonable to expect. I can’t tell if the quantity of apps sold is simply the nature of the low price points for iPhone applications, or if it is a temporary anomaly caused by the newness and novelty of the App Store. All the numbers are from the first year of an application. I wonder about the sustainability of the rate, and at what point would I saturate the market. I strongly suspect the number of units sold per day is going to eventually come down, and the cost per unit will have to go up.

I’m unconvinced that having one or two iPhone applications as a sole source of revenue is sustainable. Earning $4,000/year seems like the most likely scenario (at least after the first year), and that’s simply not enough money to live off of.

Addendum: As a point of comparison, here’s some data on free applications:

Amount Sold Time Period Price Average Sold per Day
123966 30 days FREE 4132

As they say, there’s a huge price increase from free to $0.01.

P.S. What this article really needs is more data. If you’ve released sales numbers, please leave a comment with a link to it. If you’d like to contribute, but remain anonymous, send me an email (see Contact tab above) with the numbers.